As Passed by the Senate 1
123rd General Assembly 4
Regular Session Am. H. B. No. 78 5
1999-2000 6
REPRESENTATIVES WOMER BENJAMIN-CALLENDER-MOTTLEY-FORD-BUCHY- 8
WILLAMOWSKI-SALERNO-GRENDELL 9
_________________________________________________________________ 10
A B I L L
To amend sections 1151.38, 1151.61, 1701.04, 12
1701.06, 1701.09, 1701.11, 1701.15, 1701.18, 13
1701.24, 1701.33, 1701.45, 1701.59, 1701.63, 14
1701.70, 1701.71, and 1701.95, to enact new 16
section 1701.10, and to repeal section 1701.10 of
the Revised Code to modify the General 17
Corporation Law, including modifications to alter 18
the requirements for the formation of a 19
corporation, including the contents of the 20
articles of incorporation, the terms of and 21
subscription for shares, and the adoption of 22
corporate regulations; to specify limits on 23
pre-emptive rights of shareholders; to specify 24
the rights of fractional shareholders; to specify 25
the liability of shareholders to the corporation
and its creditors; to specify the determination 26
of the date for measuring the effect of a 28
dividend or distribution on a corporation; to 29
specify a record date for determining the
eligibility of shareholders for a dividend or 30
distribution; to specify the authority of 31
incorporators, initial directors, and subsequent 32
directors of a corporation to amend the articles 34
of incorporation; and to make nonsubstantive
technical modifications to the law. 35
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BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: 37
Section 1. That sections 1151.38, 1151.61, 1701.04, 39
1701.06, 1701.09, 1701.11, 1701.15, 1701.18, 1701.24, 1701.33, 40
1701.45, 1701.59, 1701.63, 1701.70, 1701.71, and 1701.95 be 41
amended and new section 1701.10 of the Revised Code be enacted to 43
read as follows:
Sec. 1151.38. In AS USED IN this section, "federal 52
association" means a federal savings and loan association, and 54
"state association" means a building STATE SAVINGS and loan 55
association.
Any federal association having its home office in this 57
state may convert or reorganize into a state association under 58
this section and section 1151.39 of the Revised Code, by 59
proceeding as follows: 60
(A) The board of directors of the federal association, at 62
any regular or special meeting called for that purpose, shall 63
adopt a plan to convert or reorganize into a state association. 64
(B) Such THE plan and any amendments or additions thereto 67
TO THE PLAN shall be considered, and a vote shall be taken on the 68
question of its adoption, at an annual meeting of the members of 69
the federal association, or at any special meeting of the members 70
of the federal association called to consider such THE action. 71
If the bylaws of the federal association do not require written 72
notice of such THE annual or special meeting, written notice of 73
the time, place, and purpose of such meeting shall be mailed by 75
the federal association, postage prepaid, at least ten days prior 76
to the date on which such meeting convenes, to each member of 77
record of the federal association, but such THE mailing shall not 78
be a condition precedent to, nor shall any defect in such THE 80
mailing affect the validity of, any such THE meeting. The 82
adoption of such THE plan shall require the vote of fifty-one per 84
cent or more of the votes cast by the members present in person 85
or by proxy at such meeting.
(C) Two copies of the minutes of such meeting, together 87
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with a statement showing the giving of such THE WRITTEN notice, 88
and two copies of the minutes of the meeting of the members of 89
the board of the federal association, all verified by an 90
affidavit of the secretary or other proper custodian of the 91
records of the federal association, shall be filed both in the 92
office of the superintendent of building and loan associations 93
FINANCIAL INSTITUTIONS and with the federal home loan bank board. 95
Such verified copies, when filed, shall be presumptive evidence 96
of the holding and action of such meeting. 97
(D) A majority of the members of the board of the federal 99
association, which majority shall consist of not less than three 100
directors, a majority of whom are citizens of the United States, 101
shall subscribe to, acknowledge, and file articles of 102
incorporation in the office of the secretary of state. Two 103
copies of the articles shall be filed with the federal home loan 104
bank board. The articles shall set forth ALL OF THE FOLLOWING: 105
(1) All statements required by paragraphs DIVISIONS 108
(A)(1), (2), AND (3), and (4) of division (A) of section 1701.04 109
of the Revised Code and any desired provision authorized by 110
paragraphs (1) DIVISIONS (B)(3), (2) (4), and (3) of division (B) 111
(5) of such THAT section; 112
(2) A statement showing that the state association is 114
incorporated by conversion or reorganization from the federal 115
association; 116
(3) A statement showing the assumption by the state 118
association of all shares, accounts, and liabilities of the 119
federal association as of the date on which the conversion or 120
reorganization is to be completed, and the manner in which each 121
class of such shares, accounts, and liabilities will be 122
discharged or adjusted by the state association. 123
Upon receipt of the articles, the secretary of state shall 125
forthwith transmit to the superintendent a copy of such THE 126
articles. If it appears that the state association, if formed, 127
will be entitled to commence the business for which it is 128
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organized, the superintendent shall so certify to the secretary 129
of state, who shall thereupon record such THE articles UPON THAT 130
CERTIFICATE. 131
(E) On the day and hour of such recording, the federal 133
association shall be deemed converted or reorganized into the 134
state association, and thereupon UPON THAT CONVERSION OR 135
REORGANIZATION, BOTH OF THE FOLLOWING APPLY: 136
(1) All the federal association's property and assets, and 138
every right, privilege, and interest then existing, belonging or 139
pertaining to it or which would inure to it, shall immediately, 140
without any conveyance or transfer and without any further act, 141
SHALL be vested in and become the property of the successor state 142
association, which shall hold and enjoy them in its own right, to 143
the same extent as they were held and enjoyed by the federal 144
association. All liens upon the property and assets of such THE 145
federal association existing at the time of conversion shall be 146
preserved unimpaired and limited in lien to the property or 147
assets then affected thereby BY LIENS. This section does not 148
deprive any person, firm, or corporation of any substantive right 150
existing at the time of such conversion against such THE federal 151
association, nor of the right to enforce any such right OF THAT 153
NATURE by proceedings against the property and assets transferred 155
by operation of this division, in the event and to the extent 156
that such THE substantive right is not satisfied or adjusted by 157
the successor state association in accordance with its articles. 158
(2) The state association shall commence business and 160
shall be subject to the laws of this state relating to domestic 161
building SAVINGS and loan associations. 162
Any action or proceeding pending by or against such THE 164
federal association at the time of such THE conversion or 165
reorganization may be prosecuted to judgment, with right of 167
appeal, as in other cases, as if such THE conversion or 168
reorganization had not taken place, or the successor state 169
association may be substituted for such THE federal association. 170
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A copy of the articles recorded in the office of the 172
secretary of state, certified by the secretary of state under the 173
seal of his THE SECRETARY OF STATE'S office and showing the day 174
and hour of recording, shall be recorded in the office of the 176
county recorder of the county in which the federal association 177
had its principal office or place of business at the time of its 178
conversion or reorganization, and in each county in the state in 179
which such THE federal association owned real estate at the time 180
of its conversion or reorganization, for which recording the 181
recorder shall charge the same fees as for the recording of 182
deeds. Two copies of the articles, as so recorded and certified, 183
and showing the date and hour of such THE recording, shall be 184
filed with the federal home loan bank board. 185
Sec. 1151.61. A building SAVINGS and loan association may 194
be reorganized, with the written consent of the DEPUTY 195
superintendent of building SAVINGS and loan associations, in the 196
following manner:
(A) The board of directors may adopt a plan of 198
reorganization, which may include any change in the articles of 199
incorporation, including changes of issued or unissued shares, 200
which could be effected by amendment to the articles, except as 201
otherwise provided in this section; the increase or reduction of 202
the authorized capital stock, the stock credits, and the fully 203
paid and issued capital stock; the determination or 204
redetermination of the fair value to the association of its 205
assets, tangible or intangible ASSETS; the allotment of a part of 207
the amount so determined or redetermined to stock credits and to 208
fully paid and issued capital stock, and a part to the reserve 209
fund; the retention as reserve and undivided profits of any of 210
the existing reserve and undivided profits; the manner, terms, 211
and basis of converting or exchanging shares; and such ANY other 212
details as THAT the board considers necessary or desirable. The 214
board shall not adopt, and the superintendent shall not approve, 216
any plan which THAT, by amendment to the articles or otherwise, 217
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changes the purpose of the association from that of a building 219
SAVINGS and loan association within the meaning of section 221
1151.01 of the Revised Code. 222
(B) A special meeting of the stockholders shall be called, 224
of which notice shall be given to each stockholder at his THE 225
STOCKHOLDER'S last known post-office address as it appears on the 227
records of the association, whether or not he THE STOCKHOLDER is 228
entitled to vote. At such meeting, the plan of reorganization, 230
including any amendments of or additions to the plan proposed at 231
such THE meeting, shall be considered, and a vote shall be taken 232
on the question of its adoption. The adoption of such THE plan 233
requires the vote, in person or by proxy, of the holders of 234
fifty-one per cent of the stock. If the plan so provides, the 235
board may, within forty-five days after the day on which such THE 236
vote is taken, MAY rescind the action of the shareholders if in 238
its judgment the consummation of the plan will be against the 239
best interests of the association because of the number of 240
dissenting shareholders or the amount of stock owned by them. 241
(C) All shareholders dissenting from such plan are 243
entitled to relief in the manner and under the conditions 244
provided in section 1701.85 of the Revised Code, except that when 245
the plan includes only a reduction in the authorized capital 246
stock, in the stock credits, and in the fully paid and issued 247
capital stock, the filing of his THE DISSENTING SHAREHOLDER'S 248
demand for payment of the fair cash value of his THE DISSENTING 250
SHAREHOLDER'S stock credits shall constitute an application for 252
withdrawal or repurchase, and the fair cash value of his THE
DISSENTING SHAREHOLDER'S stock credits as finally determined in 254
accordance with such THAT section shall be payable only at such 255
THE times as THAT are permitted under his THE DISSENTING 257
SHAREHOLDER'S right of withdrawal or repurchase at the time such 258
an application is filed. 259
(D) The plan shall become effective when it has been 261
adopted by the shareholders and approved in writing by the 262
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superintendent, and the president or a vice-president, and the 263
secretary or an assistant secretary, of the association have 264
signed and filed in the office of the secretary of state a 265
certificate of reorganization, with the consent of the 266
superintendent indorsed thereon ENDORSED ON THE CERTIFICATE, 267
containing a copy of the plan of reorganization, and also 269
containing the following items, unless the item in question is 270
included in such THE plan:
(1) All statements required by paragraphs DIVISIONS 273
(A)(1), (2), and (4) of division (A) (3) of section 1701.04 of 274
the Revised Code to be included in the original articles of 275
incorporation, and any provisions authorized by paragraphs (1) 276
DIVISIONS (B)(3), (2) (4), and (3) of division (B) (5) of such 278
THAT section which are to remain in effect or to be included as 280
part of the plan;
(2) A statement of the amount of fully paid and issued 282
capital stock, the amount of stock credits, and the amount of 283
authorized capital stock, both before and after such THE 284
reorganization. 285
(E) Any such AN association whose plan of reorganization 287
is disapproved by the superintendent may, within thirty days 288
after such THE disapproval and by leave of court first obtained, 289
MAY file, in the court of common pleas of Franklin county or of 292
the county in which the association has its principal place of 293
business, an action against the superintendent, alleging the 294
facts upon which it relies for a reversal of his THE 295
SUPERINTENDENT'S action and praying for such a reversal. The 297
action of the superintendent shall not be reversed unless the 298
court finds that he THE SUPERINTENDENT exceeded his THE 299
SUPERINTENDENT'S power or abused his THE SUPERINTENDENT'S 300
discretion in disapproving such THE plan. 301
No order of court shall restrain the superintendent from 303
making an examination of such THE association and its affairs at 304
any time under sections 1155.09 and 1155.10 of the Revised Code. 305
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Sec. 1701.04. (A) Any person, singly or jointly with 314
others, and without regard to residence, domicile, or state of 315
incorporation, may form a corporation by signing and filing with 316
the secretary of state articles of incorporation which shall set 317
forth ALL OF THE FOLLOWING: 318
(1) The name of the corporation, which shall be in 320
compliance with the provisions of division (A) of section 1701.05 321
of the Revised Code; 322
(2) The place in this state where the principal office of 324
the corporation is to be located; 325
(3) The purpose or purposes for which the corporation is 327
formed, which may consist of a statement that the purpose, either 328
alone or with other specified purposes, is to engage in any 329
lawful act or activity for which corporations may be formed under 330
this chapter. By such statement, all lawful acts and activities 331
of the corporation conforming to the conditions and limitations, 332
if any, specified in the articles are within the purposes of the 333
corporation. 334
(4) The authorized number and the par value per share of 336
shares with par value, and the authorized number of shares 337
without par value, except that the articles of a banking, safe 338
deposit, trust, or insurance corporation shall not authorize 339
shares without par value; the express terms, if any, of the 340
shares; and, if the shares are classified, the designation of 341
each class, the authorized number and par value per share, if 342
any, of the shares of each class, and the express terms of the 343
shares of each class; 344
(5)(4) If the corporation is to have an initial stated 346
capital, the amount of that stated capital. 347
(B) The articles also may set forth ANY OF THE FOLLOWING: 349
(1) THE NAMES OF THE INDIVIDUALS WHO ARE TO SERVE AS 351
INITIAL DIRECTORS; 352
(2) THE PURPOSE OR PURPOSES FOR WHICH THE CORPORATION IS 355
FORMED, BUT IN THE ABSENCE OF A STATEMENT OF THE PURPOSE OR
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PURPOSES OR EXCEPT AS EXPRESSLY SET FORTH IN SUCH STATEMENT, THE 357
PURPOSE FOR WHICH ANY CORPORATION IS FORMED IS TO ENGAGE IN ANY 358
LAWFUL ACT OR ACTIVITY FOR WHICH A CORPORATION MAY BE FORMED 359
UNDER THIS CHAPTER, AND ALL LAWFUL ACTS AND ACTIVITIES OF THE 360
CORPORATION ARE WITHIN THE PURPOSES OF THE CORPORATION; 361
(3) Any lawful provision for the purpose of defining, 363
limiting, or regulating the exercise of the authority of the 364
corporation, the incorporators, the directors, the officers, the 365
shareholders, or the holders of any class of shares; 366
(2)(4) Any provision that may be set forth in the 368
regulations; 369
(3)(5) A provision specifying the period of existence of 371
the corporation if it is to be otherwise than perpetual; 372
(4)(6) Subject to division (C) of this section, any 374
additional provision permitted by this chapter. 375
(C) Original articles of a corporation may not set forth 377
any provision that eliminates the rights of shareholders under 378
this chapter to cumulate the voting power that they possess in 379
the election of directors. 380
(D) A written appointment of a statutory agent for the 382
purposes set forth in section 1701.07 of the Revised Code shall 383
be filed with the articles, unless the corporation belongs to one 384
of the classes mentioned in division (O) of that section. 385
(E) The legal existence of the corporation shall begin 387
upon the filing of the articles, and, unless the articles 388
otherwise provide, its period of existence shall be perpetual. 389
Sec. 1701.06. (A) The express terms of shares may include 398
statements specifying ANY OF THE FOLLOWING: 399
(1) Dividend or distribution rights, which may be: 401
cumulative or noncumulative; at a specified rate, amount, or 402
proportion; with or without further participation rights; and in 403
preference to, junior to, or on a parity in whole or in part with 404
dividend or distribution rights of shares of any other class; 405
(2) Liquidation rights, preferences, and price; 407
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(3) Redemption rights and price; 409
(4) Sinking fund retirements REQUIREMENTS, which may 411
require the corporation to provide a sinking fund out of earnings 413
or otherwise for the purchase or redemption of such THE shares or 414
for dividends or distributions on them; 416
(5) Voting rights, which may be full, limited, or denied, 418
except as otherwise required by law; 419
(6) Pre-emptive rights, or the denial or limitation of 421
them; 422
(7) Conversion rights; 424
(8) Restrictions on the issuance of shares; 426
(9) Rights of alteration of express terms; 428
(10) The division of any class of shares into series; 430
(11) The designation and authorized number of shares of 432
each series; 433
(12) The right of the directors, subject to such ANY 435
limitations as THAT may be stated, to adopt amendments to the 436
articles in respect of any unissued or treasury shares of any 438
class and thereby to fix or change: the division of such shares 439
into series and the designation and authorized number of shares 440
of each series; the dividend or distribution rate; the dates of 441
payment of dividends or distributions and the dates from which 442
they are cumulative; liquidation price; redemption rights and 443
price; sinking fund requirements; conversion rights; and 444
restrictions on the issuance of shares of any class or series 445
DETERMINING, IN WHOLE OR IN PART, THE EXPRESS TERMS, WITHIN THE 447
LIMITS SET FORTH IN THIS CHAPTER, OF ANY CLASS OF SHARES BEFORE 448
THE ISSUANCE OF ANY SHARES OF THAT CLASS, OR OF ONE OR MORE 449
SERIES WITHIN A CLASS BEFORE THE ISSUANCE OF ANY SHARES OF THAT 450
SERIES;
(13) Any other relative, participating, optional, or other 452
special rights and privileges of, and qualifications or 453
restrictions on, the rights of holders of shares of any class or 454
series. 455
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(B) The express terms of shares of different series of any 457
particular class shall be identical, except that there may be 458
variations in respect of: the dividend or distribution rate; the 459
dates of payment of dividends or distributions and the dates from 460
which they are cumulative; redemption rights and price; 461
liquidation price; sinking fund requirements; conversion rights; 462
and restrictions on the issuance of shares of the same series or 463
of any other class or series EACH SERIES OF A CLASS SHALL BE 464
GIVEN A DISTINGUISHING DESIGNATION. ALL SHARES OF A SERIES SHALL 466
HAVE EXPRESS TERMS IDENTICAL WITH THOSE OF OTHER SHARES OF THE 467
SAME SERIES. ANY OF THE EXPRESS TERMS OF ANY CLASS OR SERIES OF 468
SHARES MAY BE MADE DEPENDENT UPON FACTS ASCERTAINABLE OUTSIDE THE 469
ARTICLES OR ANY AMENDMENT TO THOSE ARTICLES, PROVIDED THAT THE 470
MANNER IN WHICH THE FACTS OPERATE UPON THE EXPRESS TERMS IS SET 471
FORTH IN THE ARTICLES OR ANY AMENDMENT TO THOSE ARTICLES. 472
Sec. 1701.09. (A) After the articles have been filed, the 481
incorporators or a majority of them shall MAY receive 482
subscriptions for shares at such time and place as THAT they may 484
determine.
(B) Unless the articles fix the consideration for which 486
subscriptions are to be received, ALL OF THE FOLLOWING APPLY: 487
(1) If subscriptions are to be received for shares without 489
par value, the incorporators shall fix the consideration for 490
which they will receive subscriptions for such shares. 491
(2) If subscriptions are to be received for shares with 493
par value, the consideration for the shares shall be the par 494
value or such THE greater consideration as THAT the incorporators 496
fix.
(3) If any subscriptions are to be payable otherwise than 498
in money, the incorporators may determine the fair value to the 499
corporation of the consideration for such THE shares. 500
(C) No subscriptions for shares shall be received by the 502
incorporators IF THE ARTICLES NAME THE INITIAL DIRECTORS OR after 503
THE MEETING OF THE SHAREHOLDERS OR INCORPORATORS AT WHICH the 504
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INITIAL election of directors OCCURS. 505
(D) The failure of incorporators of a corporation formed 507
or attempted to be formed under the laws of this state then in 508
effect to file in the office of the secretary of state a 509
certificate of subscripion SUBSCRIPTION required by such THOSE 510
laws to be filed does not make the existence of said THE 511
corporation or any of its acts subject to question. 512
Sec. 1701.10. (A) AFTER INCORPORATION, ALL OF THE 514
FOLLOWING APPLY: 515
(1) IF THE INITIAL DIRECTORS ARE NAMED IN THE ARTICLES, 517
THE INITIAL DIRECTORS SHALL HOLD AN ORGANIZATIONAL MEETING, AT 518
THE CALL OF A MAJORITY OF THE DIRECTORS, TO COMPLETE THE 519
ORGANIZATION OF THE CORPORATION BY RECEIVING SUBSCRIPTIONS, 520
APPOINTING OFFICERS, ADOPTING REGULATIONS, AND CARRYING ON ANY 521
OTHER BUSINESS BROUGHT BEFORE THE MEETING. 522
(2) IF THE INITIAL DIRECTORS ARE NOT NAMED IN THE 524
ARTICLES, THE INCORPORATOR OR INCORPORATORS EITHER SHALL RECEIVE 525
SUBSCRIPTIONS AS PROVIDED IN DIVISION (A) OF SECTION 1701.09 OF 527
THE REVISED CODE OR SHALL HOLD AN ORGANIZATIONAL MEETING AT THE 529
CALL OF A MAJORITY OF THE INCORPORATORS TO ELECT DIRECTORS WHO 530
SHALL COMPLETE THE ORGANIZATION OF THE CORPORATION AS PROVIDED IN 531
DIVISION (A)(1) OF THIS SECTION. IF SUBSCRIPTIONS FOR SHARES ARE 532
RECEIVED BY THE INCORPORATORS, THE INCORPORATORS, OR A MAJORITY 533
OF THEM, SHALL GIVE NOT LESS THAN SEVEN DAYS' WRITTEN NOTICE TO 534
THE SHAREHOLDERS, UNLESS WRITTEN NOTICE IS WAIVED BY THE 535
SHAREHOLDERS, TO MEET AT A SPECIFIED TIME AND PLACE FOR THE 536
PURPOSES OF ADOPTING REGULATIONS, ELECTING DIRECTORS, AND 537
TRANSACTING ANY OTHER BUSINESS. THE SHAREHOLDERS SHALL MEET FOR 538
THOSE PURPOSES AT THE TIME AND PLACE SPECIFIED. 539
(3) NOTWITHSTANDING DIVISIONS (A)(1) AND (2) OF THIS 541
SECTION, IF REGULATIONS HAVE NOT BEEN ADOPTED WITHIN NINETY DAYS 542
AFTER THE FORMATION OF THE CORPORATION, REGULATIONS MAY BE 543
ADOPTED ONLY BY THE SHAREHOLDERS IN EITHER OF THE FOLLOWING WAYS: 544
(a) AT A MEETING OF SHAREHOLDERS CALLED FOR THAT PURPOSE 547
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BY THE DIRECTORS OR, IF NO DIRECTORS HAVE BEEN NAMED IN THE 548
ARTICLES OR ELECTED, AT A MEETING OF SHAREHOLDERS CALLED FOR THAT 549
PURPOSE BY AT LEAST A MAJORITY OF THE INCORPORATORS. THE 550
DIRECTORS OR INCORPORATORS SHALL GIVE NOT LESS THAN SEVEN DAYS' 551
WRITTEN NOTICE TO THE SHAREHOLDERS, UNLESS WRITTEN NOTICE IS 552
WAIVED BY THE SHAREHOLDERS, TO MEET AT A SPECIFIED TIME AND PLACE 553
FOR THE PURPOSES OF ADOPTING REGULATIONS AND TRANSACTING ANY 554
OTHER BUSINESS;
(b) WITHOUT A MEETING, BY THE WRITTEN CONSENT OF THE 557
HOLDERS OF SHARES ENTITLING THEM TO EXERCISE TWO-THIRDS OF THE 558
VOTING POWER ON THE PROPOSAL.
(4) IN NO EVENT MAY THE DIRECTORS TAKE ANY ACTION TO ADOPT 562
OR AMEND REGULATIONS AFTER THE SHAREHOLDERS HAVE ADOPTED
REGULATIONS. 563
(B) ACTION REQUIRED OR PERMITTED BY THIS CHAPTER TO BE 566
TAKEN BY THE INCORPORATORS AT AN ORGANIZATIONAL MEETING MAY BE 567
TAKEN WITHOUT A MEETING IF THE ACTION TAKEN IS EVIDENCED BY ONE 568
OR MORE WRITTEN CONSENTS DESCRIBING THE ACTION TAKEN AND SIGNED 569
BY EACH INCORPORATOR. 570
(C) AN ORGANIZATIONAL MEETING MAY BE HELD IN OR OUT OF 573
THIS STATE.
Sec. 1701.11. (A)(1) Regulations for the government of a 582
corporation, the conduct of its affairs, and the management of 583
its property, consistent with law and the articles, may be 584
adopted by IN ANY OF THE FOLLOWING WAYS: 585
(a) WITHIN NINETY DAYS AFTER THE CORPORATION IS FORMED, BY 587
THE DIRECTORS IN ACCORDANCE WITH SECTION 1701.10 OF THE REVISED 588
CODE;
(b) BY the shareholders at a meeting held for that 590
purpose, by the affirmative vote of the holders of shares 591
entitling them to exercise a majority of the voting power of the 592
corporation on the proposal, or may be adopted without; 593
(c) WITHOUT a meeting, by the written consent of the 596
holders of shares entitling them to exercise two-thirds of the
14
voting power OF THE CORPORATION on the proposal; and the. 597
(2) THE regulations may be amended, or new regulations may 599
be adopted, in like manner and by like vote or consent, or, if 600
EITHER OF THE FOLLOWING WAYS: 601
(a) BY THE SHAREHOLDERS AT A MEETING HELD FOR THAT 604
PURPOSE, BY THE AFFIRMATIVE VOTE OF THE HOLDERS OF SHARES 605
ENTITLING THEM TO EXERCISE A MAJORITY OF THE VOTING POWER OF THE 606
CORPORATION ON THE PROPOSAL;
(b) WITHOUT A MEETING, BY THE WRITTEN CONSENT OF THE 609
HOLDERS OF SHARES ENTITLING THEM TO EXERCISE TWO-THIRDS OF THE 610
VOTING POWER OF THE CORPORATION ON THE PROPOSAL. 611
(3) IF the articles or the regulations THAT HAVE BEEN 614
ADOPTED so provide or permit, REGULATIONS MAY BE ADOPTED OR 615
AMENDED OR NEW REGULATIONS MAY BE ADOPTED by the affirmative vote 616
or written consent of the holders of shares entitling them to 617
exercise a greater or lesser proportion but not less than a
majority of the voting power OF THE CORPORATION. 618
(B) Without limiting the generality of the authority 620
described in division (A) of this section, the regulations may 621
include provisions with respect to ALL OF THE FOLLOWING: 622
(1) The time and place for holding, the manner of and 624
authority for calling, giving notice of, and conducting, and the 625
requirements of a quorum for, meetings of shareholders; 626
(2) The taking of a record of shareholders or the 628
temporary closing of books against transfers of shares; 629
(3) The number, classification, manner of fixing or 631
changing the number, qualifications, term of office, and 632
compensation or manner of fixing compensation, of directors; 633
(4) The time and place for holding, the manner of and 635
authority for calling, giving notice of, and conducting, and the 636
requirements of a quorum for, meetings of the directors; 637
(5) The appointment of an executive and other committees 639
of the directors, and their authority; 640
(6) The titles, qualifications, duties, term of office, 642
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compensation or manner of fixing compensation, and the removal, 643
of officers; 644
(7) The terms on which new certificates for shares may be 646
issued in the place of lost, stolen, or destroyed certificates; 647
(8) The manner in which and conditions upon which a 649
certificated security, and the conditions upon which an 650
uncertificated security, and the shares represented by a 651
certificated or uncertificated security, may be transferred, 652
restrictions on the right to transfer the shares, and 653
reservations of liens on the shares.; 654
(9)(a) Restrictions on the transfer and the right to 656
transfer shares of either of the following: 657
(i) An issuing public corporation to any person in a 659
control share acquisition; 660
(ii) A corporation with fifty or more shareholders to any 662
person in an acquisition that would be a control share 663
acquisition if the corporation were an issuing public 664
corporation. 665
(b) The restrictions on the transfer and the right to 667
transfer shares described in division (B)(9)(a)(i) and (ii) of 668
this section may include requirements and procedures for consent 669
to such an acquisition OF THE SHARES by directors based on a 670
determination by the directors of the best interests of the 672
corporation and its shareholders, consent to such an acquisition 673
OF THE SHARES by shareholders, and reasonable sanctions for a 675
violation of such THOSE requirements, including the right of the 676
corporation to refuse to transfer, to redeem, or to deny voting 677
or other shareholder rights appurtenant to shares acquired in 678
such an acquisition OF THE SHARES.
(10) Defining, limiting, or regulating the exercise of the 680
authority of the corporation, the directors, the officers, or all 681
the shareholders. 682
(C) The shareholders of a corporation may adopt and may 684
authorize the directors to adopt, either before or during an 685
16
emergency, as that term is defined in division (U) of section 686
1701.01 of the Revised Code, emergency regulations which THAT 687
shall be operative only during an emergency. The emergency 689
regulations may include such ANY provisions as THAT are 690
authorized to be included in regulations by divisions (A) and (B) 692
of this section. In addition, unless expressly prohibited by the 693
articles or the regulations, the emergency regulations may make 694
any provision, notwithstanding any different provisions in 695
sections 1701.01 to 1701.98 of the Revised Code THIS CHAPTER and 696
notwithstanding any different provisions in the articles or the 698
regulations that are not expressly stated to be operative during 699
an emergency, that may be practical or necessary with respect to 700
the following:
(1) The time and place for holding, the manner of and 702
authority for calling, giving notice of, and conducting, and the 703
requirements of a quorum for, meetings of the directors; 704
(2) The creation and appointment of an executive and other 706
committees of the directors and the delegation of authority to 707
the committees by the board; 708
(3) The creation, existence, and filling of vacancies, 710
including temporary vacancies, in the office of director; 711
(4) The selection, by appointment, election, or otherwise, 713
of officers and other persons to serve as directors for a meeting 714
of the board in the absence from the meeting of one or more of 715
the directors; 716
(5) The creation, existence, and filling of vacancies, 718
including temporary vacancies, in any office; 719
(6) The order of rank and the succession to the duties and 721
authority of officers. 722
(D) If the regulations are amended or new regulations are 724
adopted, without a meeting of the shareholders, the secretary of 725
the corporation shall mail a copy of the amendment or the new 726
regulations to each shareholder who would have been entitled to 727
vote on the adoption of the amendment or the new regulations and 728
17
did not participate in the adoption of the amendment or the new 729
regulations. 730
(E) No person dealing with the corporation shall be 732
charged with constructive notice of the regulations. 733
(F) Unless expressly prohibited by the articles or the 735
regulations or unless otherwise provided by the emergency 736
regulations, the following special rules shall be applicable 737
during an emergency notwithstanding any different provision 738
elsewhere in sections 1701.01 to 1701.98 of the Revised Code THIS 739
CHAPTER: 740
(1) Meetings of the directors may be called by any officer 742
or director. 743
(2) Notice of the time and place of each meeting of the 745
directors shall be given to such of the directors as it may be 746
feasible to reach at the time and by such THE means of 747
communication, written or oral, personal or mass, as may be 749
practicable at the time. 750
(3) The director or directors present at any meeting of 752
the directors that has been duly called and notice of which has 753
been duly given shall constitute a quorum for the meeting, and, 754
in the absence of one or more of the directors, the director or 755
directors present may appoint one or more of the officers of the 756
corporation directors for the meeting. 757
(4) If none of the directors attends a meeting of the 759
directors that has been duly called and notice of which has been 760
duly given, the officers of the corporation who are present, not 761
exceeding three, in order of rank, shall be directors for the 762
meeting, shall constitute a quorum for the meeting, and may 763
appoint one or more of the other officers of the corporation 764
directors for the meeting. 765
(5) If the chief executive officer dies, is missing, or 767
for any other reason is temporarily or permanently incapable of 768
discharging the duties of his THE office, the next ranking 769
officer who is available shall assume the duties and authority of 771
18
the office of the deceased, missing, or incapacitated chief 772
executive officer until such time as the directors shall 773
otherwise order.
(6) The offices of secretary and treasurer shall be deemed 775
to be of equal rank, and, within the same office and as between 776
the offices of secretary and treasurer, rank shall be determined 777
by priority in time of the first election to the office or, if 778
two or more persons shall have been first elected to the office 779
at the same time, by seniority in age. 780
Sec. 1701.15. (A) Unless otherwise provided in THE 789
SHAREHOLDERS OF A CORPORATION DO NOT HAVE A PRE-EMPTIVE RIGHT TO 790
ACQUIRE THE CORPORATION'S UNISSUED SHARES EXCEPT TO THE EXTENT 791
THE ARTICLES SO PROVIDE. IF the articles, PROVIDE THAT the 792
holders of the shares of any class, other than shares which THAT 794
are limited as to dividend or distribution rate and liquidation 796
price, shall HAVE PRE-EMPTIVE RIGHTS, THOSE HOLDERS, upon the 798
offering or sale for cash of shares of the same class, SHALL have 800
the right, during a reasonable time and on reasonable terms fixed 801
by the directors, to purchase such THE shares in proportion to 802
their respective holdings of shares of such class, at a price 804
fixed as provided in sections 1701.01 to 1701.98 of the Revised 805
Code THIS CHAPTER, unless the shares offered or sold are IN ANY 806
OF THE FOLLOWING CATEGORIES:
(1) Treasury shares; 808
(2) Issued as a share dividend or distribution; 810
(3) Issued or agreed to be issued for considerations other 812
than money; 813
(4) Issued or agreed to be issued upon exercise of options 815
granted and authorized in accordance with section 1701.16 of the 816
Revised Code; 817
(5) Issued or agreed to be issued upon conversion of 819
convertible shares authorized in the articles, or upon exercise 820
of conversion rights conferred and authorized in accordance with 821
section 1701.22 of the Revised Code; 822
19
(6) Offered to shareholders in satisfaction of their 824
pre-emptive rights and not purchased by such shareholders, and 826
thereupon issued or agreed to be issued for a consideration not 827
less than that at which such THE shares were so offered to such 828
shareholders, less reasonable expenses, compensation, or discount 829
paid or allowed for the sale, underwriting, or purchase of such 830
THE shares, unless by the affirmative vote or written order of 832
the holders of two-thirds of the shares otherwise entitled to 833
such THE pre-emptive rights, the pre-emptive rights are restored 834
as to any of such THE shares not theretofore PREVIOUSLY issued or 836
agreed to be issued;
(7) Released from pre-emptive rights by the affirmative 838
vote or written consent of the holders of two-thirds of the 839
shares entitled to such THE pre-emptive rights. Any such vote or 841
consent shall be entered in the records of the corporation and
shall be binding on all shareholders and their transferees for 842
the time specified in such THE vote or consent up to but not 843
exceeding one year, and shall protect all persons who within such 844
THAT time acquire the shares or options on or conversion or other 845
rights with respect to the shares so released; 846
(8) Released from pre-emptive rights by the affirmative 848
vote or written consent of the holders of a majority of the 849
shares entitled to such THE pre-emptive rights, for offering and 850
sale, or the grant of options with respect thereto, to any or all 851
employees of the corporation or of subsidiary corporations or to 852
a trustee on their behalf, under a plan adopted or to be adopted 853
by the directors for that purpose. 854
(B) No action shall be brought upon any cause of action 856
arising under division (A) of this section at any time after two 857
years from the day on which a written notice or other 858
communication is given or mailed to each shareholder having such 859
a THE cause of action informing the shareholder of the 860
transaction giving rise thereto TO THE CAUSE OF ACTION, and no 861
action shall in any event be brought upon any such cause of 863
20
action OF THAT NATURE at any time after four years from the day 865
on which such THE cause of action arose, or from the effective 866
date of this provision, whichever is the later.
(C) THE PROVISIONS OF DIVISION (A) OF THIS SECTION AS THEY 869
EXISTED PRIOR TO THE EFFECTIVE DATE OF THIS AMENDMENT, SHALL 870
CONTINUE TO APPLY TO ANY CORPORATION INCORPORATED PRIOR TO THE 872
EFFECTIVE DATE OF THIS AMENDMENT, UNTIL THE SHAREHOLDERS OF THE
CORPORATION ADOPT AN AMENDMENT TO ITS ARTICLES EXPRESSLY 873
PROVIDING THAT THE PROVISIONS OF DIVISION (A) OF THIS SECTION 875
THAT TAKE EFFECT ON THE EFFECTIVE DATE OF THIS AMENDMENT APPLY TO 877
THE CORPORATION OR AMENDED ARTICLES OF INCORPORATION.
Sec. 1701.18. (A) Except as provided in the case of 886
change of shares, share dividends or distributions, 887
reorganization, merger, consolidation, combination, or conversion 888
of shares or obligations into shares, THE FOLLOWING APPLY: 889
(1) Payment for shares shall be made with money or other 891
property of any description, or any interest therein IN PROPERTY, 893
actually transferred to the corporation, or labor or services 894
actually rendered to the corporation. 895
(2) In the case of shares with par value, other than 897
treasury shares, said THE consideration shall be not less than 898
the par value of the shares, provided that such THE shares may be 900
sold and paid for at such a discount from the par value of the 902
shares as THAT would amount to or not exceed reasonable 903
compensation for the sale, underwriting, or purchase of such THE 905
shares, and, regardless of such THE discount such, THE shares 907
shall be deemed to be fully paid. 908
(3) In the case of treasury shares with par value, the 910
consideration may be less than the par value of the shares. 911
(B) Promissory notes, drafts, or other obligations of a 913
subscriber or purchaser do not constitute payment for shares. 914
(C) An agreement by a person to perform services as the 916
consideration for shares does not, of itself, constitute such THE 918
person a shareholder or AND DOES NOT, OF ITSELF, CONSTITUTE 919
21
payment for such shares prior to the performance of such THE 920
services.
(D) Except in the case of convertible shares or 922
obligations, shares with par value shall not be issued or 923
disposed of upon change of shares, share dividends or 924
distributions, reorganization, merger, consolidation, exchange of 925
shares for other shares or securities, or otherwise, if as a 926
result thereof the aggregate liabilities of the corporation plus 928
its stated capital would exceed its aggregate assets or any such 929
existing excess would be increased. 930
(E) When shares have been issued as provided in sections 932
1701.01 to 1701.98 of the Revised Code THIS CHAPTER, in the case 933
of change of shares, share dividends or distributions, 935
reorganization, merger, consolidation, or conversion of shares or 936
obligations into shares, or when shares have been paid for in 937
conformity with this section, such shares shall be deemed fully 938
paid and nonassessable. 939
(F) Every person who subscribes for or purchases shares of 941
a corporation is liable to the corporation to pay or deliver to 942
the corporation the consideration agreed upon, and, except as 943
provided in division (A) of this section, if such THE shares are 944
with par value, such THE person is obligated to pay to the 945
corporation therefor FOR THE SHARES in money or other property or 947
services the full par value of the shares. THE PERSON IS NOT 949
LIABLE TO THE CORPORATION OR ITS CREDITORS IN ANY OTHER AMOUNT. 950
(G) Every holder, whether the original or a transferee, of 952
shares not paid for as provided in this section, who has acquired 953
them with actual knowledge of that fact, is personally liable to 954
the corporation for the amount unpaid on the shares, and his THE 955
HOLDER'S liability shall continue notwithstanding any transfer of 957
such THE shares, until such THE shares are paid in full; but no 959
holder who has acquired such THE shares without actual knowledge 961
of the fact that the shares are not paid for is under any 963
liability in respect of the shares. 964
22
(H) No pledgee or other holder of shares as collateral 966
security is personally liable as a shareholder. 967
(I) No person who in fact, whether disclosed on the 969
records of the corporation or otherwise, holds shares as 970
executor, administrator, guardian, trustee, trustee of a voting 971
trust, receiver, or in any other fiduciary capacity is personally 972
liable as a shareholder, but the estate or property in the hands 973
of such fiduciary is liable or the real or beneficial owner is 974
liable under this section as equity may require. This section 975
does not relieve a fiduciary from liability for a breach of 976
trust. 977
(J) EXCEPT AS SET FORTH IN ANY PROVISION IN TITLE LVII OF 980
THE REVISED CODE, NEITHER A SHAREHOLDER OF A CORPORATION NOR A
SUBSCRIBER TO ITS SHARES IS PERSONALLY LIABLE FOR ANY DEBTS, 981
OBLIGATIONS, OR LIABILITIES OF THE CORPORATION IN THE ABSENCE OF 982
A WRITTEN, ENFORCEABLE AGREEMENT THAT IS SIGNED BY THE 983
SHAREHOLDER OR SUBSCRIBER AND THAT SPECIFICALLY UNDERTAKES 984
LIABILITY FOR SUCH DEBTS, OBLIGATIONS, OR LIABILITIES. 985
Sec. 1701.24. (A) The shares of a corporation are 994
personal property. 995
(B) Each holder of shares is entitled to one or more 997
certificates, signed by the chairperson of the board or the 999
president or a vice-president and by the secretary, an assistant
secretary, the treasurer, or an assistant treasurer of the 1,000
corporation, which shall certify the number and class of shares 1,001
held by the holder in such THE corporation, but no certificate 1,002
for shares shall be executed or delivered until such shares are 1,003
fully paid. When such a THE certificate is countersigned by an 1,004
incorporated transfer agent or registrar, the signature of any of 1,005
such THOSE officers of the corporation may be facsimile, 1,006
engraved, stamped, or printed. Although any officer of the 1,007
corporation whose manual or facsimile signature is affixed to 1,008
such a THE certificate ceases to be such officer before the 1,010
certificate is delivered, such THE certificate nevertheless shall 1,011
23
be effective in all respects when delivered. 1,012
(C) A corporation is not obligated to but may issue 1,014
fractional shares. THE HOLDER OF A FRACTIONAL SHARE IS ENTITLED 1,015
TO EXERCISE THE RIGHTS OF A SHAREHOLDER, INCLUDING THE RIGHT TO 1,017
VOTE, TO RECEIVE DIVIDENDS, AND TO PARTICIPATE IN THE ASSETS OF 1,018
THE CORPORATION UPON LIQUIDATION. In the case of uncertificated 1,019
securities, the corporation may proceed as provided in divisions 1,021
(C)(1) and (2) of this section. In the case of certificated 1,022
securities, the corporation may execute and deliver a certificate 1,023
for or including a fraction of a share; or, in lieu thereof, may 1,024
DO ANY OF THE FOLLOWING: 1,025
(1) Pay to the person otherwise entitled to become a 1,027
holder of a fraction of a share an amount in cash specified as 1,028
the value thereof OF THE FRACTION OF A SHARE in the articles, a 1,029
resolution of the directors, or other agreement or instrument 1,031
pursuant to which such fraction of a share OTHERWISE would 1,032
otherwise be issued, or, if not so specified, then the amount 1,034
determined for such THAT purpose by the directors of the issuing 1,035
corporation, or the amount realized upon sale of such THE 1,036
fraction of a share; 1,037
(2) Provide reasonable means to afford to such THE person 1,039
the opportunity, on specified terms and conditions, to purchase 1,040
or sell fractional interests in shares, to the exclusion of all 1,041
rights he THE PERSON OTHERWISE might otherwise have; 1,042
(3) Execute and deliver registered or bearer scrip over 1,044
the manual or facsimile signature of an officer of the 1,045
corporation or of its agent for that purpose, exchangeable as 1,046
therein provided IN THE SCRIP for full shares, but such scrip 1,047
shall not entitle the holder to any rights as a shareholder 1,049
except as therein provided IN THE SCRIP. The scrip may provide 1,050
that it shall become void unless the rights of the holders are 1,052
exercised within a specified period and may contain any other 1,053
provisions that the corporation deems advisable. Whenever any 1,054
such scrip ceases to be exchangeable for full shares, the shares 1,055
24
that OTHERWISE would otherwise have been issuable as therein 1,057
provided IN THE SCRIP shall be deemed to be treasury shares 1,059
unless the scrip contains other provision for their disposition. 1,060
(D) A joint estate with the incidents of a joint estate as 1,062
at common law, including the right of survivorship, may be 1,063
created in shares by registering the same in the case of 1,064
uncertificated securities, or by executing and delivering a 1,065
certificate therefor in the case of certificated securities to 1,066
two or more persons with the words "as joint tenants" or "as 1,067
joint tenants with right of survivorship and not as tenants in 1,068
common" following their names. Upon receipt by the corporation 1,069
of proof satisfactory to it of the death of one or more of such 1,070
joint tenants, it may register the transfer to, or execute and 1,071
deliver a new certificate to, the survivor or survivors. 1,072
(E) Whenever a corporation has determined that any 1,074
outstanding certificates for shares should be canceled and 1,075
exchanged for other certificates, the corporation may order and 1,076
require the holders of the outstanding certificates to surrender 1,077
them for such THAT purpose within a reasonable time to be fixed 1,078
by the corporation. Such THE order may provide that, until 1,079
compliance therewith WITH THE ORDER, any or all rights as a 1,081
shareholder of the holder of any certificate so required to be 1,083
surrendered shall be suspended with respect to the shares 1,084
represented thereby BY THE CERTIFICATE. Not less than ten days 1,086
before any such THE order is to become effective, the corporation 1,087
shall give notice thereof OF THE ORDER by mail to each 1,088
shareholder affected thereby BY THE ORDER at his THE 1,089
SHAREHOLDER'S address as it appears on the records of the 1,091
corporation.
(F) Unless otherwise provided by the articles or 1,093
regulations, the directors may provide by resolution that some or 1,094
all of any or all classes and series of shares of a corporation 1,095
shall be uncertificated shares, provided that such THE resolution 1,097
shall not apply to shares represented by a certificate until such 1,098
25
THE certificate is surrendered to the corporation and that such 1,101
THE resolution shall not apply to a certificated security issued 1,102
in exchange for an uncertificated security. Within a reasonable 1,104
time after the issuance or transfer of uncertificated shares, the 1,105
corporation shall send to the registered owner thereof OF THE 1,106
SHARES a written notice containing the information required to be 1,107
set forth or stated on certificates pursuant to division (A) of 1,109
section 1701.25 of the Revised Code. Except as otherwise
expressly provided by law, the rights and obligations of the 1,111
holders of uncertificated shares and the rights and obligations 1,112
of the holders of certificates representing shares of the same 1,113
class and series shall be identical. 1,114
Sec. 1701.33. The directors may declare dividends and 1,123
distributions on outstanding shares of the corporation, subject 1,124
to the following provisions: 1,125
(A) A dividend or distribution may be paid in cash, 1,127
property, or shares of the corporation. The dividend or 1,128
distribution shall not exceed the combination of the surplus of 1,129
the corporation and the difference between the following: 1,130
(1) The reduction in surplus that results from the 1,132
immediate recognition of the transition obligation under 1,133
statement of financial accounting standards no. 106 (SFAS no. 1,134
106), issued by the financial accounting standards board; 1,135
(2) The aggregate amount of the transition obligation that 1,137
would have been recognized as of the date of the declaration of a 1,138
dividend or distribution if the corporation had elected to 1,139
amortize its recognition of the transition obligation under 1,140
statement of financial accounting standards no. 106. 1,141
(B) A dividend or distribution may be paid in treasury 1,143
shares or in authorized but unissued shares. If paid in shares 1,144
with par value, there shall be transferred from any surplus, 1,145
however created, to stated capital, such THE amount, if any, as 1,147
THAT is necessary in order that the stated capital represented by 1,148
the outstanding shares with par value, after giving effect to 1,149
26
such THE dividend or distribution, will be equal to the aggregate 1,150
par value of such THE shares, or, if the directors so determine, 1,151
a greater amount shall be so transferred. If paid in shares 1,152
without par value, there shall be transferred from any surplus, 1,153
however created, to stated capital, only such THE amount, if any, 1,155
as THAT the directors determine. 1,156
(C) No dividend or distribution shall be paid to the 1,158
holders of shares of any class in violation of the rights of the 1,159
holders of shares of any other class, or when the corporation is 1,160
insolvent or there is reasonable ground to believe that by such 1,161
payment it would be rendered insolvent;. 1,162
(D) No dividend or distribution on shares of any class 1,164
shall be paid in shares of another class if any of the authorized 1,165
shares of such THE latter class are already outstanding, unless 1,166
either the articles so provide or such THE payment is authorized 1,167
by the affirmative vote of the holders of at least two-thirds of 1,169
the shares of the class in which payment is to be made;. 1,170
(E) If the articles of a corporation engaged in whole or 1,172
in part in the exploitation of mines, timber, oil wells, gas 1,173
wells, quarries, or other natural resources so provide, the 1,174
corporation may compute its surplus for the purpose of paying 1,175
dividends and distributions without making any deduction or 1,176
allowance for the depletion of such assets incidental to the 1,177
exploitation and sale of them;. 1,178
(F) When any portion of a dividend or distribution is paid 1,180
out of capital surplus, the corporation, at the time of paying 1,181
the same DIVIDEND OR DISTRIBUTION, shall notify the shareholders 1,182
receiving the same DIVIDEND OR DISTRIBUTION as to the kind of 1,183
surplus out of which the dividend OR DISTRIBUTION is paid. 1,184
(G) When a dividend or distribution is to be paid in 1,186
authorized but unissued shares of the corporation, the directors 1,187
may provide that such THE dividend or distribution shall also be 1,188
paid on treasury shares of the same class. 1,190
(H) THE EFFECT OF A DIVIDEND OR DISTRIBUTION IS MEASURED 1,193
27
AS OF THE DATE THE DIVIDEND OR DISTRIBUTION IS AUTHORIZED IF THE 1,194
PAYMENT OCCURS ONE HUNDRED TWENTY DAYS OR LESS AFTER THE DATE OF 1,195
AUTHORIZATION OR AS OF THE DATE THE PAYMENT IS MADE IF IT OCCURS 1,196
MORE THAN ONE HUNDRED TWENTY DAYS AFTER THE DATE OF 1,197
AUTHORIZATION. IF A CORPORATION PAYS A DIVIDEND OR DISTRIBUTION 1,198
BY DELIVERING AN OBLIGATION OR OTHER EVIDENCE OF INDEBTEDNESS, 1,199
THE DATE OF THE DELIVERY IS THE DATE UPON WHICH THE EFFECT OF THE 1,200
DIVIDEND OR DISTRIBUTION IS MEASURED. 1,201
(I) A CORPORATION'S INDEBTEDNESS TO A SHAREHOLDER INCURRED 1,204
BY REASON OF A DIVIDEND OR DISTRIBUTION MADE IN ACCORDANCE WITH 1,205
THIS SECTION IS AT PARITY WITH THE CORPORATION'S INDEBTEDNESS TO 1,206
ITS GENERAL, UNSECURED CREDITORS, EXCEPT TO THE EXTENT 1,207
SUBORDINATED BY AGREEMENT. 1,208
Sec. 1701.45. (A) For any lawful purpose, including, 1,217
without limitation, the determination of the shareholders who are 1,218
entitled to: (1) TO receive notice of or to vote at a meeting of 1,220
shareholders; (2) TO receive payment of any dividend or 1,222
distribution; (3) TO receive or exercise rights of purchase of or
subscription for, or exchange or conversion of, shares or other 1,223
securities, subject to contract rights with respect thereto TO 1,224
THE SHARES OR SECURITIES; or (4) TO participate in the execution 1,226
of written consents, waivers, or releases; the directors may fix
a record date which shall not be a date earlier than the date on 1,227
which the record date is fixed and, in the cases provided for in 1,228
clauses (1), (2) and (3) above, shall not be more than sixty 1,229
days, unless the articles or the regulations specify a shorter or 1,230
a longer period for such THAT purpose, preceding the date of the 1,232
meeting of the shareholders, or the date fixed for the payment of 1,233
any dividend or distribution, or the date fixed for the receipt
or the exercise of rights, as the case may be. 1,234
(B) If a meeting of the shareholders is called by persons 1,236
entitled to call the same, MEETING or action is taken by 1,237
shareholders without a meeting, and if the directors fail or 1,239
refuse, within such THE time as THAT the persons calling such THE 1,241
28
meeting or initiating such other action may request, to fix a 1,242
record date for the purpose of clause (1) or (4) of division (A) 1,244
of this section, then the persons calling such THE meeting or 1,245
initiating such other action may fix a record date for such 1,247
purpose EITHER OF THOSE PURPOSES, subject to the limitations set 1,249
forth in division (A) of this section.
(C) The record date for the purpose of clause (1) of 1,251
division (A) of this section shall continue to be the record date 1,252
for all adjournments of such meeting, unless the directors or the 1,253
persons who shall have fixed the original record date shall, 1,255
subject to the limitations set forth in division (A) of this 1,257
section, fix another RECORD date, and in case a new record date
is so fixed, notice thereof OF THE RECORD DATE and of the date to 1,259
which the meeting shall have HAS been adjourned shall be given to 1,261
shareholders of record as of said THAT date in accordance with 1,262
the same requirements as those applying to a meeting newly
called. 1,263
(D) The directors may close the share transfer books 1,265
against transfers of shares during the whole or any part of the 1,266
period provided for in division (A) above OF THIS SECTION, 1,267
including the date of the meeting of the shareholders and the 1,268
period ending with the date, if any, to which THE MEETING IS 1,269
adjourned.
(E) If no record date is fixed therefor, the record date 1,271
for determining the shareholders who are entitled to receive 1,273
notice of, or who are entitled to vote at, a meeting of 1,274
shareholders, shall be the date next preceding the day on which 1,276
notice is given, or the date next preceding the day on which the
meeting is held, as the case may be. 1,277
(F) The record date for a change of shares shall be the 1,279
time when the certificate of amendment or of amended articles 1,280
effecting such THE change is filed in the office of the secretary 1,282
of state.
(G) IF THE DIRECTORS DO NOT FIX A RECORD DATE FOR 1,285
29
DETERMINING SHAREHOLDERS ENTITLED TO PAYMENT OF ANY DIVIDEND OR 1,286
DISTRIBUTION, THE RECORD DATE IS THE DATE THAT THE DIRECTORS 1,287
AUTHORIZE THE DIVIDEND OR DISTRIBUTION.
Sec. 1701.59. (A) Except where the law, the articles, or 1,296
the regulations require action to be authorized or taken by 1,297
shareholders, all of the authority of a corporation shall be 1,298
exercised by or under the direction of its directors. For their 1,299
own government, the directors may adopt bylaws that are not 1,300
inconsistent with the articles or the regulations. The selection 1,301
of a time frame for the achievement of corporate goals shall be 1,302
the responsibility of the directors. 1,303
(B) A director shall perform his THE DIRECTOR'S duties as 1,305
a director, including his THE duties as a member of any committee 1,307
of the directors upon which he THE DIRECTOR may serve, in good 1,308
faith, in a manner he THE DIRECTOR reasonably believes to be in 1,310
or not opposed to the best interests of the corporation, and with 1,311
the care that an ordinarily prudent person in a like position 1,312
would use under similar circumstances. In performing his A 1,313
DIRECTOR'S duties, a director is entitled to rely on information, 1,315
opinions, reports, or statements, including financial statements 1,316
and other financial data, that are prepared or presented by ANY 1,317
OF THE FOLLOWING:
(1) One or more directors, officers, or employees of the 1,319
corporation who the director reasonably believes are reliable and 1,320
competent in the matters prepared or presented; 1,321
(2) Counsel, public accountants, or other persons as to 1,323
matters that the director reasonably believes are within the 1,324
person's professional or expert competence; 1,325
(3) A committee of the directors upon which he THE 1,327
DIRECTOR does not serve, duly established in accordance with a 1,329
provision of the articles or the regulations, as to matters 1,330
within its designated authority, which committee the director 1,331
reasonably believes to merit confidence. 1,332
(C) For purposes of division (B) of this section, THE 1,334
30
FOLLOWING APPLY: 1,335
(1) A director shall not be found to have violated his THE 1,337
DIRECTOR'S duties under division (B) of this section unless it is 1,339
proved by clear and convincing evidence that the director has not 1,340
acted in good faith, in a manner he THE DIRECTOR reasonably 1,341
believes to be in or not opposed to the best interests of the 1,343
corporation, or with the care that an ordinarily prudent person 1,344
in a like position would use under similar circumstances, in any 1,345
action brought against a director, including actions involving or 1,346
affecting any of the following: 1,347
(a) A change or potential change in control of the 1,349
corporation, including a determination to resist a change or 1,350
potential change in control made pursuant to division (F)(7) of 1,351
section 1701.13 of the Revised Code; 1,352
(b) A termination or potential termination of his THE 1,354
DIRECTOR'S service to the corporation as a director; 1,356
(c) His THE DIRECTOR'S service in any other position or 1,358
relationship with the corporation. 1,360
(2) A director shall not be considered to be acting in 1,362
good faith if he THE DIRECTOR has knowledge concerning the matter 1,364
in question that would cause reliance on information, opinions, 1,365
reports, or statements that are prepared or presented by the 1,366
persons described in divisions (B)(1) to (3) of this section to 1,367
be unwarranted. 1,368
(3) Nothing contained in this division limits relief 1,370
available under section 1701.60 of the Revised Code. 1,371
(D) A director shall be liable in damages for any action 1,373
he THAT THE DIRECTOR takes or fails to take as a director only if 1,375
it is proved by clear and convincing evidence in a court of 1,377
competent jurisdiction that his THE DIRECTOR'S action or failure 1,378
to act involved an act or omission undertaken with deliberate 1,380
intent to cause injury to the corporation or undertaken with 1,381
reckless disregard for the best interests of the corporation. 1,382
Nothing contained in this division affects the liability of 1,383
31
directors under section 1701.95 of the Revised Code or limits 1,384
relief available under section 1701.60 of the Revised Code. This 1,385
division does not apply if, and only to the extent that, at the 1,386
time of a director's act or omission that is the subject of 1,387
complaint, the articles or the regulations of the corporation 1,388
state by specific reference to this division that the provisions 1,389
of this division do not apply to the corporation.
(E) For purposes of this section, a director, in 1,391
determining what he THE DIRECTOR reasonably believes to be in the 1,393
best interests of the corporation, shall consider the interests 1,394
of the corporation's shareholders and, in his THE DIRECTOR'S 1,395
discretion, may consider any of the following: 1,397
(1) The interests of the corporation's employees, 1,399
suppliers, creditors, and customers; 1,400
(2) The economy of the state and nation; 1,402
(3) Community and societal considerations; 1,404
(4) The long-term as well as short-term interests of the 1,406
corporation and its shareholders, including the possibility that 1,407
these interests may be best served by the continued independence 1,408
of the corporation. 1,409
(F) Nothing contained in division (C) or (D) of this 1,411
section affects the duties of either of the following: 1,412
(1) A director who acts in any capacity other than his THE 1,415
DIRECTOR'S capacity as a director; 1,416
(2) A director of a corporation that does not have issued 1,418
and outstanding shares that are listed on a national securities 1,419
exchange or are regularly quoted in an over-the-counter market by 1,420
one or more members of a national or affiliated securities 1,421
association, who votes for or assents to any action taken by the 1,422
directors of the corporation that, in connection with a change in 1,423
control of the corporation, directly results in the holder or 1,424
holders of a majority of the outstanding shares of the 1,425
corporation receiving a greater consideration for their shares 1,426
than other shareholders. 1,427
32
Sec. 1701.63. (A) The regulations may provide for the 1,436
creation by the directors of an executive committee or any other 1,437
committee of the directors, to consist of one or more directors, 1,439
and may authorize the delegation to any such committee of any of 1,440
the authority of the directors, however conferred, other than the 1,441
authority of filling vacancies among the directors or in any 1,442
committee of the directors.
(B) The directors may appoint one or more directors as 1,444
alternate members of any such committee DESCRIBED IN DIVISION (A) 1,446
OF THIS SECTION, who may take the place of any absent member or 1,447
members at any meeting of the particular committee. 1,448
(C) Each such committee DESCRIBED IN DIVISION (A) OF THIS 1,450
SECTION shall serve at the pleasure of the directors, shall act 1,452
only in the intervals between meetings of the directors, and 1,453
shall be subject to the control and direction of the directors. 1,454
(D) Unless otherwise provided in the regulations or 1,456
ordered by the directors, any such committee DESCRIBED IN 1,457
DIVISION (A) OF THIS SECTION may act by a majority of its members 1,459
at a meeting or by a writing or writings signed by all of its 1,460
members.
(E) Unless participation by members of any such committee 1,462
DESCRIBED IN DIVISION (A) OF THIS SECTION at a meeting by means 1,464
of communications equipment is prohibited by the articles, the 1,465
regulations, or an order of the directors, meetings of the 1,466
particular committee may be held through any communications 1,467
equipment if all persons participating can hear each other. 1,468
Participation in a meeting pursuant to this division constitutes 1,469
presence at the meeting.
(F) An act or authorization of an act by any such 1,471
committee DESCRIBED IN DIVISION (A) OF THIS SECTION within the 1,472
authority delegated to it shall be as effective for all purposes 1,474
as the act or authorization of the directors. 1,475
Sec. 1701.70. (A) If an initial stated capital is not set 1,484
forth DIRECTORS ARE NOT NAMED in the articles, then before the 1,486
33
corporation begins business, or if an initial stated capital is 1,487
set forth in the articles, then before subscriptions to shares 1,488
have been received in the amount of that initial stated capital 1,489
AND BEFORE THE INCORPORATORS HAVE ELECTED DIRECTORS, the 1,490
incorporators may adopt an amendment to the articles by a writing 1,491
signed by them. IF INITIAL DIRECTORS ARE NAMED IN THE ARTICLES, 1,492
OR IF THE INCORPORATORS HAVE ELECTED DIRECTORS AND HAVE NOT 1,493
RECEIVED SUBSCRIPTIONS, THEN BEFORE SUBSCRIPTIONS TO SHARES HAVE 1,494
BEEN RECEIVED, THE DIRECTORS MAY ADOPT AN AMENDMENT TO THE 1,495
ARTICLES.
(B) The directors may adopt an amendment to the articles 1,497
in the following cases: 1,498
(1) When and to the extent authorized by the articles, the 1,500
directors may adopt an amendment in respect of any unissued or 1,501
treasury shares of any class; DETERMINING, IN WHOLE OR IN PART, 1,502
THE EXPRESS TERMS, WITHIN THE LIMITS SET FORTH IN THIS CHAPTER, 1,503
OF ANY CLASS OF SHARES BEFORE THE ISSUANCE OF ANY SHARES OF THAT 1,504
CLASS, OR OF ONE OR MORE SERIES WITHIN A CLASS BEFORE THE 1,505
ISSUANCE OF SHARES OF THAT SERIES.
(2) When the corporation shall have HAS issued shares or 1,507
obligations convertible into shares of the corporation, or shall 1,508
have HAS granted options to purchase any shares, and such THE 1,510
conversion or option rights are set forth in the articles or have 1,511
been approved by the same vote of shareholders as, at the time of 1,512
such THE approval, would have been required to amend the articles 1,514
to authorize the shares required for such THAT purpose, and the 1,515
corporation does not have sufficient authorized but unissued 1,516
shares to satisfy such THOSE conversion or option rights, the 1,517
directors may adopt an amendment to authorize such THE shares;. 1,520
(3) Whenever shares of any class have been redeemed, or 1,522
have been surrendered to or acquired by the corporation upon 1,523
conversion, exchange, purchase, or otherwise, the directors may 1,524
adopt an amendment to reduce the authorized number of shares of 1,525
such THE class by the number so redeemed, surrendered, or 1,526
34
acquired; and when all of the authorized shares of a class have 1,528
been redeemed, or surrendered to or acquired by the corporation, 1,529
the directors may adopt an amendment to eliminate from the 1,530
articles all references to the shares of such THE class and to 1,531
make such other appropriate changes as THAT are required by such 1,533
THE elimination;. 1,534
(4) When articles have been amended and any change of 1,536
issued or unissued shares provided for in the amendment or 1,537
amended articles shall have HAS become effective, the directors 1,538
may adopt an amendment to eliminate from the articles all 1,540
references to the change of shares and to make such ANY other 1,541
appropriate changes as THAT are required by such THE elimination; 1,543
however, such an amendment to articles THAT IS SO adopted by the 1,544
directors shall contain a statement with respect to the 1,546
authorized number and the par value, if any, of the shares of 1,547
each class.
(5) After a merger or consolidation, in which the 1,549
surviving or new corporation is a domestic corporation, shall 1,550
have become BECOMES effective, the directors may adopt an 1,551
amendment: 1,552
(a) To eliminate from the articles any statement or 1,554
provision pertaining exclusively to the merger or consolidation, 1,555
or that was required to be set forth in the agreement of merger 1,557
or consolidation and that would not be required in original 1,559
articles or amendments to articles filed at the time the 1,560
statement or provision was adopted;
(b) To make such ANY other appropriate changes required by 1,562
that elimination. 1,563
An amendment to articles adopted by the directors under 1,565
division (B)(5) of this section need not contain or continue any 1,566
statement with respect to the amount of stated capital. 1,567
(C) IF A VOTE ON THE ADOPTION OF AN AMENDMENT IS REQUIRED 1,570
BY DIVISION (B)(4) OF SECTION 1701.71 OF THE REVISED CODE, ANY 1,571
AMENDMENT TO THE ARTICLES ADOPTED PURSUANT TO DIVISION (B) OF 1,572
35
THIS SECTION THAT CREATES A CLASS OR SERIES OF SHARES THE EXPRESS 1,573
TERMS OF WHICH PROVIDE FOR THE CONVERTIBILITY OF THE SHARES INTO 1,574
SHARES OF ANOTHER CLASS SHALL ALSO REQUIRE THE APPROVAL OF THE 1,575
HOLDERS, VOTING AS A CLASS, OF ANY ISSUED AND OUTSTANDING SHARES 1,576
INTO WHICH THE SHARES MAY BE CONVERTED. 1,577
Sec. 1701.71. (A)(1) Except as otherwise provided in this 1,586
division or division (A)(2) of this section, the shareholders, at 1,587
a meeting held for such THAT purpose, may adopt an amendment, 1,588
including any AMENDMENT that could be adopted by the directors, 1,589
by the affirmative vote of the holders of shares entitling them 1,590
to exercise two-thirds of the voting power of the corporation on 1,591
the proposal or, if the articles provide or permit, by the 1,592
affirmative vote of a greater or lesser proportion, but not less 1,593
than a majority, of such voting power, and by such THE 1,594
affirmative vote of the holders of shares of any particular class 1,596
as THAT is required by the articles. If, at the time an 1,597
amendment to eliminate cumulative voting rights permitted by 1,598
division (B)(10) of section 1701.69 of the Revised Code is acted 1,599
upon by the shareholders, a corporation does not have issued and 1,600
outstanding shares that are listed on a national securities 1,601
exchange or are regularly quoted in an over-the-counter market by 1,602
one or more members of a national or affiliated securities 1,603
association, that amendment shall not be adopted if the votes of 1,604
a sufficient number of shares are cast against the amendment 1,605
that, if cumulatively voted at an election of all the directors, 1,606
or all the directors of a particular class, as the case may be, 1,607
would at the time the amendment is acted upon by the shareholders 1,608
be sufficient to elect at least one director. 1,609
(2) Whenever under division (B) of this section the 1,611
holders of shares of any particular class are entitled to vote as 1,612
a class on the adoption of an amendment, such THE amendment, in 1,613
order to be adopted, must receive the affirmative vote of the 1,614
holders of at least two-thirds OF THE SHARES OF THAT CLASS or, if 1,615
the articles provide or permit, a greater or lesser proportion, 1,617
36
but not less than a majority, of the shares of such THAT class. 1,618
If the proposed amendment would authorize any particular 1,619
corporate action that, under any applicable provision of law or 1,620
under the existing articles, could be authorized only by or 1,621
pursuant to a specified vote of shareholders, such THE amendment, 1,622
in order to be adopted, must receive the affirmative vote so 1,623
specified.
(B) Regardless of limitations or restrictions in the 1,625
articles on the voting rights of the shares of any class, the 1,626
holders of shares of a particular class, and in the cases 1,627
specified in divisions (B)(6), (7), and (8) of this section the 1,628
holders of shares of every class, shall be entitled to vote as a 1,629
class on the adoption of an amendment that does any of the 1,630
following: 1,631
(1) Increases or decreases the par value of the issued 1,633
shares of the particular class; 1,634
(2) Changes issued shares of the particular class, whether 1,636
with or without par value, into a lesser number of shares of the 1,637
same class or into the same or a different number of shares of 1,638
any other class, with or without par value, theretofore 1,639
PREVIOUSLY or then authorized; 1,641
(3) Changes the express terms, or adds express terms, of 1,643
the shares of the particular class in any manner substantially 1,644
prejudicial to the holders of the shares; 1,645
(4) Changes the express terms of issued shares of any 1,647
class senior to the particular class in any manner substantially 1,648
prejudicial to the holders of shares of the particular class; 1,649
(5) Authorizes shares of another class that are 1,651
convertible into, or authorizes the conversion of shares of 1,652
another class into, shares of the particular class, or authorizes 1,653
the directors to fix or alter conversion rights of shares of 1,654
another class that are convertible into shares of the particular 1,655
class; PROVIDED, HOWEVER, BOTH OF THE FOLLOWING APPLY: 1,656
(a) THE FAILURE TO OBTAIN THE SHAREHOLDERS' APPROVAL ONLY 1,659
37
PREVENTS THE CONVERSION OF THE SHARES UNTIL THE SHAREHOLDERS'
APPROVAL IS OBTAINED AND DOES NOT OTHERWISE AFFECT THE 1,660
AUTHORIZATION OR ANY OTHER EXPRESS TERMS OF THE SHARES; 1,661
(b) THE ARTICLES MAY PROVIDE THAT NO VOTE OF THE HOLDERS 1,664
OF COMMON SHARES, AS A CLASS, IS REQUIRED IN CONNECTION WITH THE 1,665
AUTHORIZATION OF SHARES OF ANY CLASS THAT ARE CONVERTIBLE INTO 1,666
COMMON SHARES.
(6) Provides, in the case of an amendment described in 1,668
division (B)(1) or (2) of this section, that the stated capital 1,669
of the corporation shall be reduced or eliminated as a result of 1,670
the amendment, or provides, in the case of an amendment described 1,671
in division (B)(5) of this section, that the stated capital of 1,672
the corporation shall be reduced or eliminated upon the exercise 1,673
of such conversion rights, provided that any such reduction or 1,674
elimination is consistent with section 1701.30 of the Revised 1,675
Code; 1,676
(7) Changes substantially the purposes of the corporation, 1,678
or provides that thereafter an A SUBSEQUENT amendment to the 1,679
articles may be adopted that changes substantially the purposes 1,681
of the corporation; 1,682
(8) Changes a corporation into a nonprofit corporation. 1,684
(C) An amendment that changes a corporation into a 1,686
nonprofit corporation shall contain a statement of purposes 1,687
proper in the case of a nonprofit corporation, and a statement 1,688
that, after the effective date of the amendment, the corporation 1,689
shall be subject to the provisions of the Revised Code relating 1,690
to nonprofit corporations. In the case of a corporation formed 1,691
on or after June 9, 1927, the amendment also shall provide for 1,692
the cancellation of all outstanding shares and the terms and 1,693
considerations, if any, for such THE cancellation. In the case 1,694
of a corporation formed prior to June 9, 1927, the amendment may 1,695
provide for such THE cancellation of outstanding shares, but if 1,696
it does not so provide, the amendment shall contain a provision 1,697
forbidding the payment of dividends or distributions on any 1,698
38
shares after the effective date of the amendment. 1,699
Sec. 1701.95. (A)(1) In addition to any other liabilities 1,708
imposed by law upon directors of a corporation and except as 1,709
provided in division (B) of this section, directors shall be 1,710
jointly and severally liable to the corporation as provided in 1,711
division (A)(2) of this section if they vote for or assent to any 1,712
of the following: 1,713
(a) The payment of a dividend or distribution, the making 1,715
of a distribution of assets to shareholders, or the purchase or 1,716
redemption of the corporation's own shares, contrary to law or 1,717
the articles;
(b) A distribution of assets to shareholders during the 1,719
winding up of the affairs of the corporation, on dissolution or 1,720
otherwise, without the payment of all known obligations of the 1,721
corporation or without making adequate provision for their 1,722
payment; 1,723
(c) The making of a loan, other than in the usual course 1,725
of business, to an officer, director, or shareholder of the 1,726
corporation, other than in either of the following cases: 1,727
(i) In the case of a savings and loan association or of a 1,729
corporation engaged in banking or in the making of loans 1,730
generally; 1,731
(ii) At the time of the making of the loan, a majority of 1,733
the disinterested directors of the corporation voted for the loan 1,734
and, taking into account the terms and provisions of the loan and 1,735
other relevant factors, determined that the making of the loan 1,736
could reasonably be expected to benefit the corporation. 1,737
(2)(a) In cases under division (A)(1)(a) of this section, 1,739
directors shall be jointly and severally liable up to the amount 1,740
of the dividend, distribution, or other payment, in excess of the 1,741
amount that could have been paid or distributed without violation 1,742
of law or the articles but not in excess of the amount that would 1,743
inure to the benefit of the creditors of the corporation if it 1,744
was insolvent at the time of the payment or distribution or there 1,745
39
was reasonable ground to believe that by that action it would be 1,746
rendered insolvent, plus the amount that was paid or distributed 1,747
to holders of shares of any class in violation of the rights of 1,748
holders of shares of any other class. 1,749
(b) In cases under division (A)(1)(b) of this section, 1,751
directors shall be jointly and severally liable to the extent 1,752
that the obligations of the corporation that are not otherwise 1,753
barred by statute are not paid or for the payment of which 1,754
adequate provision has not been made. 1,755
(c) In cases under division (A)(1)(c) of this section, 1,757
directors shall be jointly and severally liable for the amount of 1,758
the loan with interest on it at the rate specified in division 1,760
(A) of section 1343.03 of the Revised Code until the amount has 1,761
been paid.
(B)(1) A director is not liable under division (A)(1)(a) 1,763
or (b) of this section if, in determining the amount available 1,765
for any dividend, purchase, redemption, or distribution to 1,766
shareholders, the director in good faith relied on a financial 1,767
statement of the corporation prepared by an officer or employee 1,769
of the corporation in charge of its accounts or certified by a 1,770
public accountant or firm of public accountants, the director in 1,771
good faith considered the assets to be of their book value, or 1,772
the director followed what the director believed to be sound 1,773
accounting and business practice. 1,774
(2) A director is not liable under division (A)(1)(c) of 1,776
this section for making any loan to, or guaranteeing any loan to 1,777
or other obligation of, an employee stock ownership plan, as 1,778
defined in section 4975(e)(7) of the Internal Revenue Code. 1,779
(C) A director who is present at a meeting of the 1,781
directors or a committee of the directors at which action on any 1,782
matter is authorized or taken and who has not voted for or 1,783
against the action shall be presumed to have voted for the action 1,784
unless that director's written dissent from the action is filed, 1,785
either during the meeting or within a reasonable time after the 1,786
40
adjournment of the meeting, with the person acting as secretary 1,787
of the meeting or with the secretary of the corporation. 1,788
(D) A shareholder who knowingly receives any dividend, 1,790
distribution, or payment made contrary to law or the articles 1,791
shall be liable to the corporation for the amount received by 1,792
that shareholder that is in excess of the amount that could have 1,793
been paid or distributed without violation of law or the 1,794
articles.
(E) A director against whom a claim is asserted under or 1,796
pursuant to this section and who is held liable on the claim 1,797
shall be entitled to contribution, on equitable principles, from 1,798
other directors who also are liable. In addition, any director 1,799
against whom a claim is asserted under or pursuant to this 1,800
section or who is held liable shall have a right of contribution 1,801
from the shareholders who knowingly received any dividend, 1,802
distribution, or payment made contrary to law or the articles, 1,803
and those shareholders as among themselves also shall be entitled 1,805
to contribution in proportion to the amounts received by them 1,806
respectively. 1,807
(F) No action shall be brought by or on behalf of a 1,809
corporation upon a cause of action arising under division 1,811
(A)(1)(a) or (2)(b) of this section after two years from the day 1,813
on which the violation occurs.
(G) Nothing contained in this section shall preclude a 1,815
creditor whose claim is unpaid from exercising the rights that 1,817
that creditor otherwise would have by law to enforce that
creditor's claim against assets of the corporation paid or 1,818
distributed to shareholders.
(H) The failure of a corporation to observe corporate 1,820
formalities relating to meetings of directors or shareholders in 1,821
connection with the management of the corporation's affairs shall 1,822
not be considered a factor tending to establish that the 1,823
shareholders have personal liability for corporate obligations. 1,824
Section 2. That existing sections 1151.38, 1151.61, 1,826
41
1701.04, 1701.06, 1701.09, 1701.11, 1701.15, 1701.18, 1701.24, 1,827
1701.33, 1701.45, 1701.59, 1701.63, 1701.70, 1701.71, and 1701.95 1,829
and section 1701.10 of the Revised Code are hereby repealed. 1,830